HP posted a quarterly report that showed a nice increase in its profitability and a close match of last year’s revenues for the fourth quarter of 2002, so the stock market responded with a rally that crossed beyond the technical sector. HP’s combined company figures showed a $425 million profit for the last period of fiscal 2002, compared with a loss of $186 million across both Compaq and HP in last year’s Q4. Revenues for the period were $18.04 billion, just a shade under last year’s $18.1 billion combined for the two companies. For the segment of HP 3000 customers who are sticking with HP in their transition plans, the results provided some encouragement the vendor will be able to make its merger work profitably — although HP’s financial chief Bob Wayman said profits in the company’s enterprise server business will be the hardest to revive. Some of the reason for the red ink in servers is that HP’s transitions of its customers from PA-RISC to Itanium “are costing us money,” Wayman said in an analyst briefing. HP 3000 customers facing such a transition know exactly what Wayman means.

HP got more ambitious about its cost-cutting during a round of meetings with financial analysts that followed the Q4 results. HP now believes it can achieve $3 billion in savings as a result of merging with Compaq, up from the $2.5 billion projected during this year’s proxy fight. The savings will come one fiscal year sooner, too, during fiscal 2003. HP only expects IT spending to rise 4 percent during 2003, however. CEO Carly Fiorina said that “We think there continues to be an uncertain market, and tepid IT spending. We’re not yet willing to call a turnaround in the economy.” HP wouldn’t raise its projections for its next quarter’s revenues and earnings during the West Coast analyst meetings, and so the market drove the company’s stock price back down from its rally point on HP’s caution.

Fiorina also reported that some executive VPs in the company have new assignments as a result of president Michael Capellas’ $14 billion resignation last month to become embattled WorldCom’s CEO. Mike Winkler, Jeff Clarke and Webb McKinney will take on new leadership roles, reporting to Fiorina. Winkler will become executive vice president and the company’s first chief marketing officer. He will oversee global brand and communications, global alliances and total customer experience teams. Business group marketing vice presidents will now dual report into Winkler and their business units. Allison Johnson, senior vice president of global brand and communications, will report to Winkler with responsibility for all advertising and communications.

Clarke will move from the post-merger integration team to a new role as executive VP for supply chain and customer operations, managing HP’s supply chain, customer-to-cash, procurement and logistics operations and teams. Clarke also will manage HP’s $30 billion direct and $10 billion indirect material sourcing functions.

McKinney will become executive vice president of merger integration and organizational effectiveness, expanding his merger integration role to include overall responsibility for the effectiveness of strategic change management and company governance. Leaders of HP’s Personal Systems, Imaging and Printing, Enterprise and Services businesses remained on the job.